The ruling comes after a High Court judgment, handed down in September, was supportive of the estimated 370,000 companies said to be affected by the dispute.
Firms such as pubs, cafes and beauty parlours argued they faced ruin when they were turned down by insurers for business interruption policy claims on losses caused by the first coronavirus lockdown last year.
The Supreme Court found largely in favour of small firms receiving payments from business interruption insurance policies, covering losses from the first national lockdown.
Black Country Chamber of Commerce chief executive Coring Crane said the ruling was welcome news for thousands of small businesses and was a victory for the dogged approach of those that have campaigned over the last 12 months.
For many claimants it will be a chance to pay off debts that have been building and to start to plan a way forward. However, it seems incredibly sad that it took a legal process for this to be settled and for all those businesses that will be celebrating, we need to spare a thought for those that have gone under waiting for this decision despite paying their premiums in good faith for many years,” he added.
Paul Faulkner, chief executive of Greater Birmingham Chambers of Commerce, said: “This ruling provides welcome clarity for businesses and insurers alike on some of the most common questions regarding challenges to business interruption insurance during this pandemic.
“Of course, it is important to note that it does not cover all wordings or deliver a ruling on individual policies. What it does do is given insurers and businesses a clear way forward on settling many of these disputed claims.
“It will be a great source of relief to those businesses who have brought this action and those that will see the impact of this ruling, many of whom have been hard hit by Covid-19.”
The Financial Conduct Authority brought the test case which focused on a representative sample of 21 types of insurance policy.